Fiscal Year 2018 Budget

How to use this site

Users will be able to find documents and use interactive tools to help them better understand the approved CPS budget for fiscal year 2018. The interactive features allow users to easily click through the budget, drilling into specific budget line details or staying at a high level overview of the District.

Users can view a number of areas of the budget including revenue and debt while also looking at every CPS school and department. Each interactive report generates graphs and charts which will make budget comparisons visual and easier to understand.

Check out our Reader's Guide for more information.

Download your own copy of the FY18 Approved Amended Budget Book.

Download your own copy of the FY18 Approved Budget Book.

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CPS received the GFOA Distinguished Budget Presentation Award for our FY2016 online budget site.


Organization Chart

 

Update (10/5/2017): The Fiscal Year 2018 Budget approved in August by the Board of Education provided a framework for funding the District’s operations in the 2017-18 school year. The subsequent enactment of state education funding reform (P.A. 100-465 – formerly Senate Bill 1947) provided CPS with more than $450 million in new state and local resources to support the FY18 Budget.

The initial FY18 budget also included $269 million in local resources to address the district’s budget gap. As a result of both the new funding law and management efficiencies taken by CPS, the district now requires significantly fewer resources from the city and will fully resolve the budget gap through the following steps:

  • $130 million increase to CPS’ property tax levy for Chicago teachers’ pensions
  • $80 million in City of Chicago funding for school security and student safety costs
  • $55 million in debt refunding savings and purchasing savings
  • $4 million in additional state aid above the amount assumed in the original budget

In addition to providing for new state and local revenues, P.A. 100-465 includes a mandatory change to how CPS funds charter schools. Those changes are detailed in an updated version of Appendix B – School Funding Formulas.

This major step toward funding equity, along with additional local resources from the City of Chicago and further internal management efforts, will help CPS keep dollars in the classroom and continue the unprecedented academic gains Chicago students have achieved. Facing a deficit of more than $1.1 billion just two years ago, CPS is now on much firmer fiscal ground.

Details on the full FY2018 Amended Budget can be found in the Interactive Reports feature on the left-hand toolbar. All other budget items reflect the original Board-approved FY18 Budget.

Budget Overview

Unprecedented Financial Crisis Triggers 2-Year Focus on Efficiency and Financial Controls

The 2018 Chicago Public Schools budget reflects progress in the face of a State-driven fiscal crisis. Despite unequal state funding shortchanging CPS by $500 million a year, this budget protects the academic investments driving record student gains.

Since taking the helm 24 months ago, this administration and the Board of Education have delved deeply into CPS finances and operations. This relentless focus was driven by urgent necessity: the district faced a $1.1 billion operating deficit; had exhausted its cash reserves; was approaching its limit under lines of credit; and was paying high interest rates on bonds rated junk by financial markets. The district needed more aggressive and detailed cash monitoring, more accurate tracking of budgeted spending against actual spending and additional extensive financial controls, both centrally and in schools.

At the same time, although general education students were rapidly advancing, special education student performance was flat, because of the absence of critical data necessary to hold schools accountable for helping them succeed.

With the help of talented staff in partnership with preeminent national accounting, financial and municipal turnaround specialists, we created detailed and sophisticated cash flow systems; comprehensively audited the District’s vast finances and operations; established broader financial controls to ensure the integrity of District finances; and identified ways to save in excess of $145 million annually — millions that would otherwise have come from classrooms.

The FY18 budget saves millions more by incorporating the results of new reforms — changes yielding either additional revenue or cost savings that allow schools to re-direct resources to the classroom. Examples include greater centralized management of school finances and new data collection and documentation systems for reimbursable Medicaid expenses.

Other reforms will create better service delivery to students, especially diverse learners. For the first time, the district has objective, evidence-based standards to ensure equity and accuracy in Individualized Education Plans (IEPs). Services required by IEPs can now be tracked effectively and outcomes measured; training and documentation of best-practice student supports is in place for the new school year; and data-based interventions will allow early corrections if student supports are inadequate or ineffective.

These painstaking system-wide changes, necessitated not only by the financial crisis but also a drive to keep improving student outcomes, have helped pull the district back from the financial cliff; we are in a much stronger position to monitor cash, spending and data critical to measuring and managing both vendor and school performance.

But much more work needs to be done—not just to continue making the district more efficient, but to secure more revenue for CPS students shortchanged by a decade of state discrimination.

Historic Opportunity for Funding Fairness

Along with hundreds of districts throughout Illinois — rural, suburban and urban — we have fought for fair state funding for all schools, especially those serving low-income students. With Senate Bill 1, currently pending in Springfield, Illinois has a historic opportunity to help all its schools and end the state’s shameful legacy of denying low-income students the same opportunities as their wealthier peers.

Governor Rauner injected considerable uncertainty for every school district in Illinois by falsely claiming that SB1 is a bailout for Chicago. His actions have jeopardized funding for every district in the state, are filled with internal contradictions, and rely on ideas repeatedly debunked by independent fact-checking organizations. Still, his actions have forced many districts to issue budgets with assumptions about state funding, and CPS is no different. CPS incorporates SB1 funding in its State revenue assumptions for this budget because the measure has passed the General Assembly and no other legislation has advanced. CPS will make any revisions necessary after the State reaches an agreement for funding schools.

Senate Bill 1 will not solve all our financial problems, and it does not provide equal funding for Chicago. But it takes a big step in that direction. CPS continues to face formidable financial challenges, from reduced federal funding to exploding pension costs. But a continued disciplined effort of cost control and new revenues will allow the District to preserve what matters most: the continued progress of CPS students.

Key FY18 Budget Components, Investments and Updates

The FY18 budget will enable Chicago Public Schools to preserve and build on students’ tremendous educational gains.  The budget provides additional funds to schools to cover increased personnel costs, continues the substantial administrative efficiencies and management reforms that have already been implemented, and ensures the needs of the district’s diverse learners will be met. It also funds proven education initiatives, including an increased number of International Baccalaureate programs in neighborhood schools and an expanded computer science program that will support the district’s first-in-the-nation computer science graduation requirement. 

The majority of funding received by schools is based on the Student Based Budgeting model, which directs a per-pupil dollar amount to each school (with weights assigned for different grade levels).  For FY18, the base SBB rate is increased from last year’s rate of $4,087 per student to $4,290, or 5 percent.  The increase is intended to cover cost of living salary adjustments for teachers in 2018 and also to continue funding for seniority and educational attainment increases that teachers received last year.  

State funding for education remains a question, as of this publication, with the Governor’s veto of the only funding reform that has passed the General Assembly. This legislation came about after years of debate over how to fix Illinois’ worst-in-the-nation education funding, and is landmark school funding reform that gives 268 districts more money per pupil than Chicago. SB1 employs an evidence-based model for allocating general state aid to schools, channeling additional resources to schools serving low-income children. It also moves Chicago Public Schools one step closer to pension parity with the rest of the state, by funding the normal costs of Chicago teachers’ pensions. (The State pays for the full costs of other districts’ teachers’ pensions, including both normal and the larger legacy costs.)

SB1, together with the state budget that passed last month, will increase funding to CPS and also cover the normal cost of pensions for Chicago teachers. In total, CPS stands to receive $221 million for teacher pension normal cost and $71M in new formula funding from the state this year. This only begins to move Chicago students toward equity with their peers around the state, as independent groups have also confirmed. CPS would require a $500 million increase from the state for Chicago children to be treated equally, since CPS is the only school district in the State that makes its own pension payment.

While the evidence-based funding formula will provide additional state money to CPS (and hundreds of other school districts across Illinois), federal funds to CPS are declining.  Federal title grant dollars will decline by $60 million due to a combination of factors, including reduced federal spending, a decline in CPS enrollment, and a reduction in the concentration of poverty in Chicago, according to federal data.

Despite these State funding challenges, CPS continues to drive administrative and management efficiencies. Additionally, while many of these efficiencies help address financial challenges, some efficiencies redirect resources from administration to classrooms. These efficiencies are detailed at length later in this document.

For the FY18 budget, CPS is also making changes to special education funding at the request of school principals. Over the course of recent months, the Office of Diverse Learners Supports and Services has worked with principals and network chiefs to determine the number of special education teachers and paraprofessionals necessary to meet the needs of diverse learners as defined by IEPs. CPS is adding more funds for additional teachers and paraprofessionals in cluster programs, which serve students with the most severe and profound disabilities. CPS will also ensure that students continue to be placed in the least restrictive environment possible, which is required by law and best practice. To support the district’s highest need students, CPS will fund 34 new teaching positions and 68 paraprofessionals across the city for cluster classrooms, which serve the district’s most severely disabled children. The FY18 budget provides the resources from the central budget to cover these school-based positions.

In FY17, CPS faced substantial fiscal challenges due to the state’s unfair school spending formula and the Governor’s admittedly “emotional” midyear decision to veto legislation that would have provided $215 million to cover CPS’ normal pension costs (as the state does for every other school district in the state, in addition to their larger legacy costs). In the wake of state funding reform, and the many actions that the District has taken in recent years to improve operations, the FY18 budget will provide a stronger financial foundation for Chicago schools and allow Chicago students to continue their extraordinary educational progress. Should it require material changes, CPS will make them.

Investing in Students’ Futures

Building on the successes of the past six years and preparing for the challenges ahead, CPS continues to invest in areas that drive student achievement and reflect the values and priorities of the administration.  These investments include:

  • Release of a strategic three year vision, “CPS: Success Starts Here.”  This marks an important benchmark for the District, as we manage for the future and build on student academic success.  The strategic vision details the District’s commitment to academic progress, financial stability and integrity.
  • CPS has the nation’s largest International Baccalaureate network with 43 schools (22 high schools and 21 elementary) currently serving 15,000 students. This budget invests in further expansion of the nation’s largest International Baccalaureate network by transforming three elementary schools (Byrne, Kinzie, and Lavizzo) to become IB feeder schools and expanding the program at four high schools (Amundsen, Curie, Kennedy and South Shore International). The high school programs will provide students with more opportunities to earn college-level credits before graduation. The new elementary feeder schools will prepare students for IB coursework in high school. Additionally, Agassiz Elementary School will expand its existing IB program to serve pre-K through 5th grade students.
  • Expansion of the Dual Language program to include seven additional schools for a total of 27 schools, including the first two high schools in the program. The Dual Language program provides students with comprehensive programming to develop language and cultural literacy skills, fluency in both English and Spanish, and the tools to build the needed skills to pursue their dreams.
  • Expansion of a tutoring program for English learners that increases English proficiency.  The expansion increases the number of participating schools from 73 to 124, delivering academic supports to approximately 4,200 English learners in grades 2-8. 
  • The newly formed Department of Personalized Learning supports the adoption of personalized learning throughout CPS schools. In the 2016-17 school year, 30 new schools began implementing the Personalized Learning model through three new programs launched by the district, including nine schools participating in the first cohort of CPS Elevate, the district whole-school redesign program. CPS also developed district resources to support schools implementing a Personalized Learning model, including coaching tools, observation forms, and standards-aligned curriculum resources for core-content areas and social-emotional learning.
  • Expansion of the Parent Universities program that builds on 46 Parent Engagement Centers, and more than doubles the number of locations and resources for families and communities, from five to 13 Parent University sites. This program also launches five new Parent University Training Centers. Parent University is an innovative neighborhood-based program that uses a combination of in-person and online learning to help parents access more information about educational opportunities that can drive success for parents and their children.
  • Transition to the “GoCPS” common application for high school, a single streamlined application process for eighth grade students to evaluate available high school options and to be matched to the highest ranked school on their application for which they qualify and for which there are available seats.
  • Launch of a new groundbreaking graduation initiative called “Learn. Plan. Succeed.” designed to guide postsecondary success for students of all levels by requiring them to develop plans for life after graduation. CPS will become the first large urban school district to ensure that all students meet with counselors and other school staff to develop and finalize a concrete post-secondary plan before graduation.
  • Expansion of the Seal of Biliteracy, with a record 2,308 high school seniors receiving the State Seal of Biliteracy or the State Commendation with 75 high schools participating. Also launched CPS Pathways to the Seal of Biliteracy program: Over 1,285 5th graders and 8th graders in 58 elementary and middle schools were recognized for being on the path to earning the State Seal of Biliteracy by their senior year of high school.
  • Launch of an innovative competency based learning pilot in conjunction with the Illinois State Board of Education.  CPS is  one of only 10 school districts selected in the state to participate in the program, which  will provide students with a customized learning and evaluation structure that emphasizes mastery of skills as opposed to time in the classroom to improve preparation for college, career and life. 
  • Expansion of Safe Passage routes to continue the District’s efforts to ensure that students travel safely to and from school.  The additional routes at Dyett and Al Raby High School will increase the participating schools from 140 to 142, deploying more than 1,300 Safe Passage personnel from 22 community-based organizations to support more than 75,000 students on a daily basis.
  • The District’s comprehensive air conditioning plan was largely implemented one year ahead of scheduled completion, making $135 million in investments to provide air conditioning to 222 schools. Nearly all of the remaining 61 schools were completed in the spring of 2017, with five schools where air-conditioning is currently being installed as part of a larger ongoing capital project. The project ensures that every CPS student attends class in an air conditioned classroom.

Investments are Producing Results

These investments are integral to the academic gains CPS’ students have made in a short period of time.   CPS is now recognized nationally as a leader in urban education:

  • In a landmark study of statewide educational outcomes, the University of Illinois – Chicago found that CPS students are outperforming their peers in every major racial and ethnic group throughout the state. UIC analyzed 15 years of Illinois test score data to make comparisons between subgroups.
  • In its academic progress report, CPS reported dramatic improvements since 2011 on key metrics including participation in the arts, math and reading growth, graduation rates, freshman on-track to graduate, attendance, and dropout rates.  For the SY15-16, the freshman on-track rate hit an all-time high of 87.4 percent, the dropout rate was cut in half to 6.8 percent and the attendance rate was 93.4 percent.
  • CPS students have achieved a record high graduation rate, with 73.5 percent of students earning a diploma.  The graduation rate has steadily risen over the past six years, growing more than 16 percentage points since 2011 when just over half of CPS students earned a high school diploma.
  • CPS students outpace nationwide peers in graduation rate growth.  While students nationally achieved a record high graduation rate of 83.2 percent for the 2014-15 school year, CPS students are outpacing their peers with a graduation rate that is growing more than three times faster than the national rate. The national graduation rate for African American students grew 7.6 points, while CPS’ rate went up 12.6 points. The national rate for Hispanic students went up 6.6 points while CPS’ rate went up 14.3 points.
  • According to a University of Chicago study, roughly 42 percent of CPS graduates enroll in a four-year college or university – quickly approaching the national average of a 44 percent college enrollment rate.
  • U.S. News and World Report heralded seven CPS high schools among the top ten schools in Illinois. Five of those schools were also ranked nationally.
  • The School Quality Rating Policy (SQRP) measures how well schools perform and results for SY 16-17 show that the number of schools receiving the three highest quality ratings in the District has grown from 451 in the 2015-16 school year to 539 in the 2016-17 school year.
  • CPS students achieved a record high average score of 18.4 on the 2015-2016 ACT exam, which represents the highest composite score on record for the District. Scores for this college entrance exam have grown steadily in recent years, increasing by 1.2 points since 2011.
  • CPS students have attained record high levels of college and career readiness, as more than 9,200 graduating seniors in the 2015-16 school year earned early college and career credentials. Student participation in programs that award college and career credentials has  increased by 1,200 students over the last year, which represents a 9.4 percent increase since 2014.
  • The CPS 2016 graduating class received a record high $1.16 billion in scholarship offers, an increase of more than $206 million or 20 percent in scholarship dollars over the previous class year.  Scholarship money for CPS students has increased eight-fold since 2011.
  • Record rates of student participation and proficiency in Advanced Placement (AP) coursework has increased by over 40 percent since the 2010-11 school year. In the 2015-16 school year, 22,462 students took at least one AP exam and earned a passing score.  In recognition of the District’s continued success in expanding access to AP, the College Board named CPS to its District Honor Roll for the fourth consecutive year.  No other large urban district has received this honor in more than two consecutive years.
  • CPS students achieved record scores on the 2015-2016 Northwest Evaluation Association Measures of Academic Progress (NWEA MAP) exam, which measures academic achievement in grades 2-8. CPS students achieved record attainment levels on math and reading and exceeded national averages of student growth, continuing the exceptional progress our students have made in recent years.  Nearly 60 percent of CPS students are reading at or above the national average and more than half are beating the national average in math.
  • CPS suspension and expulsion rates have reached record lows for the District.  By transitioning from exclusionary disciplinary practices to research based preventative approaches, the District has decreased out of school suspension rates by 67 percent and the expulsion rate has decreased by 74 percent since 2012. 
  • The Chicago Police Department announced that crime along Safe Passage routes has fallen by nearly one third since the 2012-13 school year. The program provides students with the confidence that they can travel to and from school safely and has improved attendance at the schools served. Crime along Safe Passage routes has declined by 32 percent  since 2012, according to CPS crime statistics.

Investments for FY18

In FY18, we will take these additional steps forward to invest in students: 

  • Expand dual credit and dual enrollment programs to reach a goal of 8,750 enrollments in the 2017-18 school year. In FY18, 17 additional high schools will be approved to offer dual credit, bringing the total number of high schools offering dual credit to nearly 80.
  • Continue expansion of Dual Language program from 20 to 27 schools, serving over 6,000 English Learners.
  • Continue investment in STEM program with specialists to provide targeted, job-embedded professional development in STEM-focused instructional practices, expansion of opportunities for the Early College STEM model in high-demand industries, and the launch of STEM certification for STEM Initiative schools.
  • Continue to support the new Computer Science graduation requirement.  The program will be enhanced with teacher supports such as teaching assistants and a teacher credentialing program. Additionally, the program will increase the number of elementary schools participating in the program, which will provide a pipeline of better-prepared students for high school success.
  • Launch of the second cohort for “Chicago Builds,” a citywide CTE program focused on the trades: Electricity, Advanced Carpentry, HVAC, Welding, and General Construction. Students will participate in a 2-year program geared towards exposing them to various trades, preparing them for apprenticeship opportunities and engaging in certification and work-based learning opportunities.
  • Continue the city-wide Safe Passage program through 21 community-based vendors that will hire up to 1,300 safe passage workers for the 2017-2018 school year.

 

Reducing Bureaucracy and Achieving Administrative Efficiencies in FY17

In FY17, CPS built upon previous efforts to reduce costs while improving organizational effectiveness. These actions included the following substantial cost saving actions, which created annual savings of $145 million, along with a decline of administrative and central office headcount of nearly 30 percent.

  • Further Streamlining of Management: Continued to trim administrative costs following reduction of 400 positions in FY16. This represents a reduction of 30 percent since 2011, making Central Office staffing at its lowest level in history. More than More than 97 percent of the District’s personnel work in direct support of the District’s schools.
  • Centralization of Administrative Functions:  The District expanded the School Support Center, which provides schools with administrative services previously performed by principals and their school-based staff. Services include payroll and timekeeping support, employee expense reimbursements, and performing various budget transactions. Centralization of these functions allows schools to operate more efficiently and enables principals to focus on their core educational mission. More than $5 million was saved in schools’ budgets in FY18, a down payment toward an expected total savings of $20 million over several years.
  • Procurement Reforms: CPS achieved more than $17 million of savings in FY17 and will save an additional $4 million in FY18 by implementing a series of new purchasing strategies. Among the changes, the District identified and executed para-transit agreements to reduce student busing expenses; reduced vendors and bundled instructional materials, computers and services to leverage citywide buying power and lower costs. This allows $21 million more to be directed into classrooms. ​
  • Grant reallocation:  Instead of Title I and II grant funds being held centrally for programmatic purposes, CPS reprogrammed and directed those funds to schools, which helped those with the highest proportion of low-income students. This saved approximately $60 million, primarily through a complex grant reallocation strategy requiring navigation of federal and state rules. These additional classroom resources prevented a devastating mid-year effect on classrooms and teachers, and will continue to be deployed in classrooms in FY18.
  • Efficient scheduling initiative:  By developing new scheduling tools and refining older models, the district helped many principals save dollars and time through more effective and efficient classroom scheduling. Network chiefs were trained to assist principal where needed, ensuring that often complex school schedules met curricular needs while efficiently planning class times and personnel matches to maximize school resources.
  • Lowered Debt Service. Saved $11 million by lowering debt service costs, among other treasury initiatives.
  • Attendance Audits. The District saved $2 million through attendance audits of ALOP programs by ensuring that funding is based on the students who are actually served by the programs. Attendance audits showed that average attendance rates were lower than self-reported rates. These audits will continue in FY18.
  • Capital construction costs were reduced by $1.6 million through consolidation of overlapping construction consultant services.
  • The district created new internal controls providing transparency and increased oversight into $200 million in school-based spending. Audits determined serious controls gaps, including non-compliance with procurement rules, incorrect rates of pay, and lack of clear purpose for accounts and outcomes.
  • Accountability audits led to disciplinary actions, including terminations, for a wide variety of abuses ranging from time falsification, theft, inappropriate data access, and contracting irregularities.
  • Audits of vendor payment and employee reimbursements documented high numbers of transactional errors and weak internal controls, resulting in improved monitoring and tracking systems.
  • A Comprehensive Annual Financial Report (CAFR) was developed to protect the district from liability in critical bond issues; material weaknesses in past year’s external audits were remedied. Through its reforms and changes, the district received a clean audit opinion.
  • Data and process analysis identified key issues affecting diverse learner outcomes. New systems, data collection, training and technology were constructed to promote evidence-based best practices and objective standards to be deployed in the 2017-18 school year.

 

Building the FY18 Budget

As a result of continuing management efficiency efforts, the progress to reform the state’s school funding formula, and additional local support, CPS projects FY18 expenditures total ing $5.75 billion and backed by resources total ing $5.75 billion.   If material changes to this budget are required, CPS will make them at the appropriate time.

This budget incorporates the following major increases in expenses:

  • $124M in one-time spending reductions that occurred last year
  • $99M in teacher salary and benefit increases over FY17
  • $81M in accounting reserves used to balance the FY17 Budget
  • $52M increase in pension contributions over FY17 Budget
  • $40M from inflation in healthcare, transportation and non-CTU salary increases

 

Increased state revenue related to SB1, local resources, including $71 million from property taxes and personal property replacement taxes , and expenditure reductions, including projected lower enrollment, will partially offset these higher expenses.

 

Management Reforms and Efficiencies Projected in the FY18 Budget

CPS continues to streamline its administrative functions and operations to reduce its costs and ensure that as many resources as possible go to classrooms. The District will launch several initiatives aimed at improving educational outcomes and lowering the overall cost structure to deliver high quality educational services. In some instances, these reforms will result in direct deficit reduction; in others, the changes will allow schools to re-program funds from administration and inefficient practices directly into their classrooms.

To continue to stabilize the District’s finances, in FY18 the District intends to pursue the following initiatives to build on the structural savings that the District has achieved in the past two years.

  • Execute new management improvements of Medicaid for special education services and program enrollment through a combination of technology, improved processes, management and training, CPS has created sustainable processes and tools that will ensure eligible students have access to Medicaid and that reimbursable cost incurred by CPS are being documented and claimed. The District expects these changes to add millions in new reimbursements in the coming school year.
  • Continue efficency in use and reimbursement of federal and state grants, primarily through grant reallocation strategies developed last year, as well as an improved process and strategy around reimbursement of eligible expenses.
  • Reduce transportation spending by increasing usage of cost effective para-transit vehicles and increasing the percentage of shared routes between schools.
  • Continue to implement procurement strategies for professional services, contruction and educational services that leverage the Districts' purchasing power and drive savings.
  • Continue to generate efficiencies from personnel management, including methods of filling vacancies and allocating resources between departments to fill seasonal requirements.

 

Pensions: CPS Remains the Only Illinois District That Pays Its Own Teacher Pensions without SB1

For many years, pensions have been the single largest driver of CPS’ structural deficit. Unlike other school districts in the state, CPS is required to fund its own teacher pension system with virtually no state support. All other Illinois school districts’ pension costs are funded entirely by the state, which includes state taxes paid by Chicago taxpayers. In FY17, CPS contributed $733 million for Chicago pensions out of its own resources, while the State contributed only $12 million to CPS. In contrast, the State contributed $4 billion for all other school districts out of statewide taxes in FY17. This amounts to an FY17 pension contribution for downstate and suburban school districts of $2,447 per student versus, $32 per student for CPS.

This is in direct contrast to the State’s funding goal – outlined in statute – of providing the Chicago Teachers Pension Fund with 20 to 30 percent of its contribution to all other Illinois school districts (the state Teachers Retirement System).  If the State met the statutory funding goal in FY17, it would have contributed $797 million to CTPF instead of only $12 million.

Meanwhile, the State will continue to raise its contributions to TRS significantly. The latest TRS actuarial valuation indicates the state will make a $4.6 billion contribution to downstate and suburban teachers’ pensions in FY18.

At the same time, in FY18, CPS’ contribution to the CTPF will continue to rise, reaching $773 million. This payment represents an increase of $52 million compared to FY17 and will consume 13 percent of the District’s operating budget. The District’s required pension contributions increase even more in the coming years – a total cost of $849 million in 2021 and more than $1.7 billion in 2059 – highlighting the need for a long-term solution on pension parity between CPS and other districts in the state. 

In addition to providing most of the employer contribution for TRS, the State also funds the retiree healthcare plan for teachers outside Chicago. In FY17, the State provided an additional $110 million to support retiree healthcare for TRS retirees. At the same time, CPS contributed $65 million to CTPF for retiree healthcare but received nothing from the state.

Without meaningful and consistent increases in funding for education, increasing pension payments will continue to draw CPS resources that could otherwise be spent in the classroom. CPS’ required employer pension obligation will rise every year until 2059. In FY18 however, CPS will be able to decrease its payment by $181 million compared to FY17, because of an additional $221 million from the state that is partially offset by a $52 million increase in the total FY18 required contribution.

Chart 5: Difference Between State Payments to Downstate/Suburban Teacher Pensions Vs. Chicago Teachers, With and Without SB1

 

FY18 Detailed Budget Summary

The FY18 budget of $5,749 million is $338 million higher than the FY17 amended budget of $5,411 million. This increase reflects the higher cost of pensions, short-term debt service and teacher salaries; the removal of one-time actions used to balance the FY17 budget after the Governor’s veto of $215 million in FY17 pension support; and inflation in healthcare, transportation and non-teacher labor costs. The FY18 Budget plans to cover these cost increases and continue investments in classrooms with new state revenue in SB1 and additional local support.   

FY18 Budget Provides Framework for Sustainable Long-Term Funding

Table I  shows the major changes between the FY17 and FY18 budget.

 

Table 2: FY18 Proposed Operating Budget

($ in millions) Changes: Favorable/(Unfavorable)

FY17 Amended Budget

 

FY18 Budget

FY18 v. FY17 Budget

Revenue

 

 

 

 

Property Tax

2,607.8

 

2,678.7

70.9

  Replacement Tax

188.8

 

148.7

(40.1)

  Replacement Tax for Debt Service

(58.3)

 

(58.3)

-

  TIF surplus

87.5

 

22.3

(65.2)

  All Other Local

175.7

 

461.1

285.4

  Total Local

3,001.5

 

3,252.5

251.0

  GSA*

1,059.9

 

1,746.8

686.9

  All Other State Grants*

701.0

 

315.3

(385.7)

  GSA for Debt Service

(373.4)

 

(396.1)

(22.7)

  Unrealized State Pension Funding Equity

111.4

 

-

(111.4)

  Total State

1,498.8

 

1,666.0

167.2

  Federal

829.8

 

773.0

(56.8)

  Investment Income

-

 

1.1

1.1

  Reserves

80.8

 

57.3

23.5

  Total Resources

5,411.0

 

5,749.9

338.9

  Expenditures

5,411.0

 

5,749.9

338.9

* GSA and All Other State Grants reflect new funding structure in SB1 that generates just over $300 million in new revenue in FY18.

Local Revenues

This budget also assumes that CPS will recieve at least $269 million in local resources to address its remaining budget gap, and is working with the city of Chicago to identify and appropriate source.

Our FY18 projection for property tax revenue is $2,779 million, of which $96 million is dedicated for debt service, resulting in a total of $2,679 million available for operating purposes. This is an increase in operating revenue of $71 million over FY17 Budget.   The increase is due primarily to taxing to the cap, or rate of inflation, on existing and new property and property value growth captured by the CPS Pension Levy.

Personal Property Replacement tax (PPRT) revenue is budgeted to decrease from $189 million in FY17 to $149 million in FY18.  This includes $58 million set aside for debt service and leaves $90 million for operating purposes.  The state collects and distributes PPRT to local taxing districts. CPS receives 27.1 percent of the total Cook County share, which is equivalent to 14.0 percent of the statewide total .

CPS has received more than $1.3 billion in TIF funds for capital investments in schools throughout the city over the past decade. In addition to capital expenditures, Mayor Emanuel is also committed to declaring a surplus of TIF funds each year.  In July 2015, the Mayor announced a freeze on new spending in downtown TIF districts, which created an estimated $250 million in additional TIF surplus over five years. In the original FY17 Budget, the TIF surplus funds for CPS were returned to the more normal level of $32.5 million. In FY17, the City declared a TIF surplus that was larger than budgeted. The FY18 budget assumes is that TIF surplus revenues will return to a more normal level of $22 million .  

“Other local revenues” also includes the pension payment made by the City of Chicago on behalf of CPS employees to the Municipal Employees pension fund (discussed in the Pension chapter) and is estimated to be $51 million  in FY18. It is recorded as revenue as required by the Governmental Accounting Standards Board (GASB).    

State Revenues

CPS’ main source of state operating revenue, General State Aid (GSA), had been reduced each year since FY09, a major driver of the structural deficit. With the action taken by Springfield in FY17, CPS saw its first increase in state funding since FY09, due to GSA being held harmless, a $29 million increase in early childhood funding, and the inclusion of a new equity grant which provided CPS with an additional $102 million.

In May 2017, the General Assembly reached a long-awaited and debated agreement on much-needed education funding reform by passing Senate Bill 1, which rewrites the current General State Aid (GSA) school funding formula, which was woefully inept at ensuring children in poverty receive at least as much funding for their education as their wealthy counterparts. This new formula is known as the Evidence Based Model   and drives additional resources to districts in need while avoiding a “winners and losers” scenario by holding each district harmless. In addition, the formula begins to address the pension inequity by picking up CPS teacher pension normal cost (which is approximately two-sevenths of the total required CPS teacher pension contribution). The formula also sunsets the CPS block grant, and recognizes that the remaining five-sevenths of the required CPS pension contribution is not available to be spent on the classroom. In doing so, once the formula is fully funded years into the future, CPS will finally be treated the same as other districts in the state. In the meantime, CPS receives partial parity and will continue to push for additional state dollars into the evidence based model formula to one day reach full parity.  Total General State Aid/Evidence Based Funding for CPS is projected to increase   by nearly $300 million in FY 18.

Federal Revenues

Federal funding is set by formula and is mostly restricted for supplemental services, such as for low income students, or for specific services, such as food for children.  Federal revenues have been relatively flat, but are projected to decline in FY18.  A $57 million decline is due primarily to federal Title dollars, which are impacted by reduced federal spending, a decline in CPS enrollment, and a reduction in the concentration of poverty in Chicago, per federal data. 

 

Chart 2:  SB 1 Funding Formula Needs Annual Funding Increases to Shrink Remaining Pension Equity Gap
($ in millions)

 

Capital Budget Overview

Under the leadership of Mayor Rahm Emanuel, CPS and the Board of Education have provided over $3.2 billion since FY12 to build new schools, provide playgrounds and air conditioning, improve access to technology with new computers and expanded bandwidth, expand academic programs (career and technical education programs, for example), and make core investments in our facilities to maintain roofs, fix chimneys, and replace or fix boilers and other mechanical systems. This has been done to ensure students have a high quality learning environment to support their education.

The FY18 budget for Chicago Public Schools includes a capital plan totaling $136 million for urgent facility renovation and maintenance projects, IT investments, and school security equipment:

  • $109 million will address the district’s most urgent facility needs. This amount includes $ 73 million for priority roof, envelope, and mechanical renovation and replacement . .Another $36 million provides the ability  to address any unplanned major renovation and maintenance needs.
  • $7 million will address critical IT infrastructure and security investments.
  • $13 million will provide for management, architectural design, and other fees associated with the capital program.
  • $7 million has also been appropriated for outside funding that may materialize throughout the year, such as TIF, private grant funds, or other funding from outside sources.

 

This plan builds off of the nearly $1 billion investment included in CPS’ FY17 capital plan, which was funded primarily by the Capital Improvement Tax – a property tax levy introduced in 2016 that provides specifically for school construction, equipment, and maintenance . CPS issued bonds against this levy in December 2016 to fund critical investments in new schools, major renovations to existing schools, IT upgrades, and programmatic investments to provide a excellent educational facilities for CPS students.

The new investments included in the FY18 capital plan will be funded by proceeds from the sale of real estate, remaining prior year bond proceeds, and other capital funds and bond proceeds as they become available. The board intends to borrow to reimburse for projects as necessary depending on future market access.

Debt Budget Overview

CPS funds its Capital Improvement Program largely through the issuance of bonds.  Most of these bonds are repaid from General State Aid (GSA) revenues. Since GSA is also a major revenue source for core academic priorities, CPS faces a continuing challenge in balancing day-to-day classroom needs with the need for quality educational facilities. 

In an effort to continue to improve school facilities and lessen the impact of future debt service repaid from the District’s operating budget, in FY16, the CPS Board approved for the first time a statutorily authorized annual Capital Improvement Tax (CIT) levy to aid in funding its ongoing Capital Improvement Program. In FY17, the Board issued its first series of Capital Improvement Tax bonds (CIT Bonds) to finance a significant portion of the $938 million FY17 capital plan.  This credit secured a single-A rating from Fitch which is five notches above Fitch’s rating for the Board’s General Obligation Bonds, thus lowering its cost of capital.

As of June 30, 2017, the Board of Education has $7.5 billion of outstanding long-term debt and $1.3 billion of outstanding short-term debt.  FY18 includes appropriations of $594 million for alternate bonds, capital improvement tax bonds and PBC payments.  

Conclusion

 ​The years-long fight for equitable funding is drawing closer to a final agreement, as school districts around the state advocate for the General Assembly to override Governor Rauner’s veto of Senate Bill 1. As a major step toward equitable state funding, this provides a framework for structural revenue solutions for low income districts around the state, including CPS. It also means that CPS can continue to build on students’ remarkable academic gains as the district continues its efforts to maximize operational efficiencies and ensure every available dollar is put into the classroom. The Proposed FY18 Budget outlined in this document includes the resources to ensure every child receives a high-quality education while providing a framework to put the District on surer fiscal footing.

 

Appendix I: FY17 Operating Budget Financial Performance

FY17 Projected Results: Delay in State Block Grants, Governor’s Veto of Pension Funding Drive Year-End Deficit

CPS projects that it will end FY17 with expenditures of $5,330 million and revenues of $4,870 million.

Appendix I Table 1: FY17 End-of-Year Estimates

($ in millions) Changes: Favorable/(Unfavorable)

FY17 Amended Budget

FY17 Estimated Spend

Variance

Revenue

 

 

 

Property Tax

2,607.8

2,582.5

(25.3)

Replacement Tax (PPRT)

130.5

140.6

10.1

State Aid

1,498.9

1,154.0

(344.9)

Federal Aid

829.8

757.9

(71.9)

Interest and Investment Income

0

1.8

1.8

Other

263.1

233.2

(29.9)

Total Revenue

5,330.2

4,870.0

(460.2)

Expenditures

 

 

 

Salaries

2,349.9

2,398.5

48.7

Benefits

1,361.2

1,367.4

6.2

Contracts

1,129.3

1,123.8

(5.5)

Commodities

248.9

273.6

24.8

Equipment

24.5

30.5

6.1

Transportation

98.4

98.8

0.4

Contingencies

198.8

37.6

(161.2)

Other

1

104

103

Total Expenditures

5,411.1

5,330.5

(80.6)

 

 

 

 

Revenue (less than) Expenditure

(80.9)

(460.5)

(379.6)

 

 

 

 

Revenues
Actual FY17 revenues are $460 million below budget. This is driven by two major factors: $215M of state pension revenue vetoed by the governor and $330 million of delayed state block grants. The FY17 Amended Budget included only $111 million of pension revenue as district offset $104 million of the lost revenue through one-time offsetting expense cuts.

Local Revenue
The board’s final EAV for Tax Year 2016 was lower than budgeted and resulted in a $25 million reduction in property taxes versus budget.The Replacement Tax (PPRT), based on state Corporate Income Taxes, came in $10 million above budget due to a new state accounting system that increased incremental revenues delivered to the Board in FY17..

State Revenue
The Board implemented mid-year cuts to address the Governor’s veto of legislation providing for additional state pension funding, which reduced anticipated state revenues by $215 million versus the original budget and $111 million versus the amended budget. Additionally, the State delayed $330  million of block grant payments in FY17, which was partially offset by $101 million of FY16 revenues received in FY17.

Federal Revenue
Federal revenues were lower than budget by $72 million, due to a $23 million shortfall in Medicaid claims as compared to budget due to lower than expected enrollment and lower than projected reimbursements. The remaining $49 million of reduced federal revenues was offset by a corresponding $49 million reduction in expenditures typically reimbursed with federal funds.

Expenditures
Estimated expenditures are $81 million lower than the FY17 Amended Budget. This reduction in expenditures is offset by $49 million in reduced federal reimbursements and $30 million in reduced independent and other privately sourced funding. The remaining $2 million of reduced expenditures includes $19 million of reduced insurance costs and a $30 million reduction in non-personnel spending above the mid-year freeze estimates, offsetting a partial rollback of the mid-year budget freeze and a shortfall in budgeted expenditure reductions at schools.

Appendix II: FY18 Summary Charts

Salaries and benefits (including pension costs) to support the positions make up nearly 67 percent of the budget (with more in practice, when charter, early childhood and other program spending is taken into account). 

Appendix II Chart 1: Salaries and Benefits Make Up 67% of the Budget

 

Appendix II Chart 2: Of the 37,091 Positions, over 97% Directly Support Schools

Appendix III: Major Changes from FY17 Projected Expenditures to FY18 Budget

Account

FY2016 Expenditures

FY2017 Projected Expenditures

FY2018 Proposed Budget

Salary

$2,572,274,223

$2,485,338,886

$2,409,267,195

Benefits

1,340,468,588

1,277,287,826

1,399,988,597

Contracts

1,152,962,765

1,158,755,710

1,191,362,689

Commodities

262,811,782

238,197,678

242,822,728

Equipment

36,567,828

30,403,698

17,060,566

Transportation

95,082,733

98,096,067

106,680,864

Contingencies

26,015,544

5,800.926

382,710,546

Others

10,135

-

2,200

Grand Total

$5,486,193,598

$5,288,085,666

$5,749,895,386

Salaries and Benefits. 67 percent  of CPS’s budget is spent on salaries and benefits. Charter schools, which also spend the majority of their budget on salaries and benefits, are funded through the “Contracts” accounts in the CPS budget. Taking all spending into account, salaries and benefit costs drive the CPS budget. The reduction to the FY18 salary budget reflects anticipated savings driven by the district’s commitment to reduce administrative and operational staffing levels. The transition to an outsourced facilities management model also shifts over $20 million from salary spend to contract spend as employees transition to vendor management. Additional benefit spend in FY18 reflects increased pension contributions and healthcare costs.

Contracts. This category includes tuition for charter schools and private therapeutic schools and payments for clinicians - such as physical therapists and nurses - that are not CPS staff. This category also includes early childhood education programs provided by community partners. In addition, this category includes repair contracts, legal services, waste removal janitorial services, and other services. The increase to the FY18 Budget is due to the shift to outsourced facilities management services.

Commodities. Commodities include spending on items such as food and utilities, with these two categories making up the largest share, as well as instructional supplies such as textbooks and software, and other supplies, such as postage, paper, and the like. The FY18 Budget includes an increase from FY17 spend due to schools allocating additional funding to these categories of spending.

Equipment. Equipment pays for the cost of furniture, computers, and similar other non-consumable items. The equipment budget is down from FY17 spending as schools transfer funds into the equipment account for purchases throughout the school year. 

Transportation. The cost of bus service is the vast majority of the Transportation budget, but it also includes costs for CTA passes and reimbursement that we are legally required to provide. Transportation costs are up slightly from FY17 expenditures due to the increased cost of the district’s bus contracts.

Contingencies. This account includes three categories of items. The first represents funding that has been budgeted but not yet allocated to the account or unit where it will be spent. Under the SBB system, schools are not required to allocate all of their funds, but can hold some in contingency while they determine how they want to spend it. Similarly, we centrally hold grant funds in contingency, particularly if the grant is not yet confirmed. Spending should rarely take place from contingency accounts, which is why the budget is significantly higher than the actual expenditures. If these funds are spent at all, they are transferred to other budget lines first. Lastly, interest expense related to our operating line of credit is included in this category, and expected to grow by $62 million in FY17.

 

Page Last Modified on Thursday, October 05, 2017